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DealBook|DeepSeek Forces a Global Technology Reckoning
https://www.nytimes.com/2025/01/27/business/dealbook/deepseek-tech-stocks-reckoning.html
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The DeepSeek effect
Markets are on edge on Monday, as global tech investors face a $1 trillion wipeout. The cause: anxiety that the emergence of powerful — and cheap — Chinese artificial intelligence software could upend the economics of A.I.
Nasdaq futures have plummeted nearly 4 percent. And shares in Nvidia, the chipmaker whose processors help train and run A.I. software, are down 11 percent in premarket trading. Those in Constellation Energy, a utility betting heavily on powering A.I. data centers, are down nearly 13 percent.
Meanwhile, tech executives and policymakers have been left to wonder how strong America’s lead in A.I. is.
DeepSeek is forcing a reckoning in Silicon Valley. The company’s models appear to rival those from OpenAI, Google and Meta, despite the U.S. government’s efforts to limit China’s access to leading-edge A.I. technology. And DeepSeek says it did all this with a fraction of the resources that American competitors use.
Over the weekend, DeepSeek shot to the top of Apple’s App Store charts, rivaling ChatGPT. And DeepSeek is drastically undercutting OpenAI on price.
That raises a number of questions:
Do leading A.I. companies like Google, Meta and the privately held OpenAI and Anthropic deserve their astronomical valuations?
Do companies need to spend hundreds of billions on vast data centers powered by hugely expensive chips from Nvidia and others? Consider that OpenAI and its partners have promised to spend at least $100 billion on their Stargate project, or that Microsoft said it will spend $80 billion, or Meta $65 billion.
Does America need the huge uptick in electricity generation that has fueled a run-up in utility stocks?
American tech companies are scrambling to respond. The Information reports that Meta has tasked several teams of engineers with closely examining DeepSeek to see how they can improve their company’s own Llama A.I. software.
